Question : Which of the following is a capital account transaction?
Option 1: Receiving foreign aid
Option 2: Making a foreign direct investment
Option 3: Exporting goods and services
Option 4: Borrowing from a foreign bank
Correct Answer: Making a foreign direct investment
Solution : The correct answer is (b) Making a foreign direct investment
Making a foreign direct investment (FDI) is a capital account transaction. The capital account of the Balance of Payments (BoP) captures transactions related to the acquisition or disposal of non-financial assets, such as land, buildings, machinery, and equity interests in enterprises, between residents and non-residents.
Option 1: Exporting goods and services
Option 3: Receiving income from a foreign investment
Option 4: Paying for foreign aid
Option 1: Buying goods and services from a foreign country
Option 2: Receiving foreign aid
Option 3: Making a foreign direct investment
Option 4: Earning income from a foreign investment
Question : Which of the following is not a capital account transaction?
Option 1: Purchasing foreign stocks and bonds
Option 3: Borrowing from a foreign bank
Option 4: Buying goods and services from a foreign country
Question : Which of the following is not an example of a current account transaction?
Option 2: Paying for foreign aid
Option 3: Receiving income from foreign investments
Question : Which of the following transactions would result in a credit to the current account?
Option 1: Importing goods and services
Option 2: Exporting goods and services
Option 4: Making a foreign direct investment
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